Am interested in getting the Apple TV but want to check something before I go and spend my money on something that might not be able to do what I need.

Basically the internet I have in my house is pathetically poor, i'm talking pretty much double dial up internet speeds, and there is no sign of this changing anytime soon seeing as I live right at the limit of the telephone exchange.

As such I currently have an unlimited data plan on my iPhone and use the Personal Hotspot function for my internet at home. I find this is more than adequate and lets me play online on the PS3 fine so the speed is pretty good.

What I want to know is can I use my iPhone WIFI hotspot to connect to the Apple TV rather than having to use my pretty poor wifi speeds on my home broadband?

As for airplay, couldn't one set up a wifi router and create a network without an internet connection hanging on it? Sure, one could...

You're quite right that this could be done but my issue is that I have my iMac downstairs and when I want to use the internet I turn the wifi off on the iMac and connect via my bluetooth hotspot on the iphone. Therefore if I keep doing this I have to remember to keep switching the wifi back on and disconnecting from the bluetooth hotspot.

I wish there was a way for me to have my iMac setup to only use the wifi for sending stuff to my airport express or potential apple tv purchase and still let me use the bluetooth hotspot for when i want to use the internet but I've been told this can't be done as the iMac can't have two connections at once.

Therefore if I put the Apple TV upstairs I would prefer to just connect it via wifi to the iphone and watch stuff on the apple tv through that, with me having to put the wifi back on on the imac if i want to stream anything from there.

Could always pick up an Airport Express to extend the network. That would solve the issue for both the iMac and AppleTV in terms of connecting to one network, then you would just need your modem (iPhone) in order to get actual internet.